Sinking in Suburbia:
Whoever would have thought real estate in weird little (two-hours-from-Toronto-on-death-highway-QEW) Niagara-on-the-Lake would double in 30 months? But it did. The GTA disease spread due south right to the USA border where it ran into the reality of Buffalo (average house price $94,000). From Peterborough to Orillia, K-W, to the Hammer and down the Niagara Peninsula, property values have soared. And now they’re headed in the opposite direction.

In Mississauga, listings have jumped over 40% while sales have given up 25%. Milton is comatose, and in shock. Deals in Hamilton and Burlington collapsed 20% in June. In Waterloo Region (Silicone Valley North) the average price of all homes fell 6.2% last month while detached houses shed 9.5%, to $537,389. If this keeps up, they’ll be 50% off by the winter. And free by next summer!

What goes up with a vengeance usually comes down the same way. They walked too cocky in the 905, methinks.

It’s in the bag, now:
Not a chance interest rates will be staying put next Wednesday. By noon the Bank of Canada rate will be at least a quarter point higher, as will the big bank primes, along with the cost of HELOCs, personal lines of credit, variable-rate mortgages and all kinds of demand consumer loans. As you know, fixed-rate mortgages are already on the move, up 20 beeps so far. More to come.

The clincher was the jobs report Friday morning, showing another 45,300 people found work in June. Yeah, yeah, a lot of the positions were part-time, but the total employment picture is bright. Between April and June another 103,000 jobs were created, which is the best quarterly gain in seven long years – the same length of time since the last interest rate hike.

Said CIBC’s chief economist: “Today’s jobs numbers cement the case for the central bankers to raise rates in the coming week. The jobs market is tightening, and not that far from what historically has been judged as full employment.”

Full employment? All the Millennials with MAs working at Starbucks are stark proof of that!

Within minutes of the StatsCan print (that’s what financial dudes call a ‘report’ ), markets were giving 96% odds the Bank of Canada would move. It now appears there will be two rate increases in 2017 and (unless Trump nukes weird Kim) three more in 2018. The bank rate that was 0.5% in the first half of 2017 would then be close to 2% late in 2018. That’s a quadrupling, and it means 2.5% five-year mortgages may not be seen again in your lifetime.

Unlike this blog, bonds mature:
Most people with mortgages lock in for five years, and the cost of that benchmark loan is dictated by the bond market. The gold standard is Government of Canada 5-year debt, which was yielding a piteous 0.9% just a few weeks ago. It has now spiked to almost 1.5% (Friday’s close: 1.471%), which is the highest since 2014.

So, multiple increases by Mr. Poloz at the BoC, locking step with the US Fed, will plump bonds for some time, drop bond prices, and be passed through in steadily-increasing mortgage costs. And you know what the likely result of that will be, right?

Two charts say ‘housing’s screwed’ so eloquently:
Less than two months ago over 90% of all properties coming to the GTA market sold immediately. Now there are 60% more for sale than a year ago, and plunge of historic proportions has taken place in the sales-to-listings ratio. Buyers could not contain their enthusiasm when choice was limited and competition fierce. Now that conditions have improved unbelievably, they’ve fled. Go figure.

Source: RBC Economics

And here’s what the impact has been on pricing. Detached homes are down 14% in eight weeks, which is the extent of most normal real estate corrections. Unless something happens to halt the downward momentum, we could eclipse the seriously painful plop of the 1990s, when Toronto digs lost 32% of their value. As mentioned, it took 14 years to erase the effects of the decline.

So tell us again, Re/Max, how it’s different this time.

Source: Toronto Real Estate Board

And talk about bad timing:
Given all of the above, the last thing those poor realtors and mortgage brokers need is a regulator on steroids. But here’s OSFI, the agency that polices financial institutions giving notice this week that everyone borrowing money will have to be stress-tested before a mortgage is granted – starting this autumn.

Borrowers – even those with a 20% down payment and no need for mortgage insurance – will have to prove they could carry a loan costing 200 basis points (2%) more than the going rate. Ouch. That’s uncomfortably close to double current rates. Impacted will be about 80% of all buyers who have those relatively big down payments, which means they will qualify to borrow less than requested – about 18% less.

Says mortgage broker and RateSpy owner Rob McLister: “This one change would have more of an impact to mortgage shoppers than any Bank of Canada rate hike in history.”

It’s time for a scotch.

184 comments ↓

FIRST!!!! I would like to say that I love dogs too. Secondly, I do mortgages as a broker. I have to say that there is not going to be a soft landing, I see too many people with huge credit card spending due to the fact that they don’t live with in their means, and they use up their lines of credit fast and have no plans to pay them off, due to their income and spending problem. I think that too much (29%) of Ontario’s GDP is from real estate activities. Once this housing market really starts to cool down, it will be a loooonng winter for many people, triggering a recession in the Ontario economy. Living outside of your means will catch up sooner or later. And I think it is coming very soon. If you saved your money good for you!! If you financed everything, you should reconsider your plans, you will pay a lot more in interest out of your paycheque very soon!!!! Then again this is a financial blog where most people here actually pay attention to their hard earned money. So I guess this is preaching to the choir eh?

Absolutely! As a Niagara resident I recall the days pre housing bubble when Canadian cottages would list in $US to attract rich American buyers. Everything changed about 10 years ago when suddenly all of the buyers were now Canadian.

Property prices in Niagara Falls, Canada are 2-3X more $ than comparable homes in Niagara Falls, NY. I think we’re going back to the way things were sooner than later.

So the bottom chart seems to indicate that the average price of housing in the Toronto area was roughly $625,000 back in January 2016. Is it reasonable to expect that former average price may become the new normal? Can one then presume anyone who purchased since January 2016 will be the ones who suffer most from any price decline but those who purchased prior to January 2016 really haven’t lost anything until such time as the average price is lower than what they actually paid?

I don’t think the BOC will be as aggressive as you’re suggesting. They may become more dovish in the future if the unwind turns into a crash and hurts the overall economy. The current data is obviously suggesting everything is fine but the picture in 6 months could be much different if home prices continue to fall at this pace.

I like it! Raise those rates! Pull up a seat to watch the great unwinding. Sorry Milton, looks like you’ve contracted the deadly “hot glue and chip board can’t no longer sell my houses” syndrome. And you people thought you were so cool on your 32 X 80 foot lot overlooking the Halton Dump Site. Let it burn baby!

No worries, the seller’s will be to advertising a large cash back notice at the bottom of every new listing.No one will ever need a down payment or mortgage insurance again. This has likely been going on for some time.Instant 30% equity position with zero down ,four hour bridge loan for closing available from seller for a small fee to be repaid with cash back due after close. See ,you are richer then you think.Amaze your family and friends with your new net worth.

It is the plan of the global elites to send this world into a debt death spiral. These people are not looking out for our best interests. It is of my opinion that the next down turn will be global in effect and cascade any left over liquidity into a few hands. At this point in time we the people left with nothing will be begging for a new system and they will have one to offer. This entire plan is part of a much larger scheme coupled with the one world religion being brought forth by the Vatican. The mark of the beast spoken in the book of revelation where one cannot buy or sell without this mark. This is where we are headed, global enslavement. Although this blog provides great tools to protect ones wealth, there is only one thing that will protect you from the coming calamity called the great tribulation. His name is Jesus Christ and he died for all you because he loves you all greater than you can ever imagine. Turn to him before it’s too late, your eternal salvation depends on it. God bless.

Yeah, great news. Let the market crash, burn, implode, explode. The prices were just insane, people in these dead beat soulless suburbs thought they were kings and queens, but now all they see in the mirror is the joker! I love it. Happy Housing Crash Everyone!!!!! Yeah and I’m not even the HHCE poster, but I love his style.

Sorry LH, you and your massive mortgage on your moldy SFH, will not be fine. I live in one of the nicest streets in the 416 and this market is dead, like dead. Lots of for sale signs, but oops no more buyers. Hope you locked in LH cause you are in for a wild ride to the bottom. Don’t you just love how all the overleveraged people on this blog love to say how “they’ll be fine and they’ll never raise rates.” Hah Ahahahahahah hahahahah ha.

The slide in home prices will eventually force a lot of people back into renting as happened in the US.

This recent survey of purpose built rental apartments suggests to me we have a long way to go in meeting this need.

“Individual investors own almost half of the apartment stock in the country and a new survey from Canada Mortgage and Housing Corp. shows those landlords are getting lower rental rates and dealing with higher vacancy rates.”

Note that the average building owned by individual investors was built in 1962.

Out of curiosity…..with interest rates returning to more normal levels – does that mean the attack on defined benefit pensions will stop? I mean, a large factor (according to most pundits) for the deficits was the fact that pensions couldn’t get decent returns from their fixed income portfolios…..so wouldn’t the opposite be true with interest rates rising? But doesn’t that mean that bond prices drop? So which is it – with average Joe be further ahead or behind?

Ha ha ha ahhhh Milton, you poor pathetic place to call home. I will personally enjoy watching you and your smug attitude gown down in the tsunami that’s about to hit your shores. This is the new advertising for this area: Welcome to Milton, Ontario’s new fake stone and aluminum siding ghetto.

#14 2 fingers is a dufus on 07.07.17 at 9:20 pm
Get a grip #5, you highly leveraged going broke soon dummy.
………………………..
Hahaha. You are a bigger one. My home was paid off 15 years ago, my RRIF, TFSA, market acct. and company pension are doing very ok, and I haven’t owed a nickel anywhere in 15 years. How are u doin’ ?

What about renewing with a different lender?
Do they make you qualify for that at +2% as well?
Even with massive equity in the home?
I would think that with massive equity, there is 0 risk for the bank, no?

Raise those rates! Raise those Rates! Yaaaa hoooooo. Watch your imaginary real estate equity disappear. I can’t wait for all the dinner parties over the summer and into the fall. Finally all the smugness will be replaced with reality.

There is a fire sale right now in Pickering Ajax. Take $100,000 off any list price and then haggle for more. Of course you might melt some day if there is a nuclear meltdown. And you have to live in Pickering Ajax.

Hope you are ok? I always enjoy reading your posts about greedy realtors writhing in pain. How they are screaming and squirming as they realize they should have pursued a secondary education, wondering how their high school diploma will help them land their next job. Whether Starbucks will miss them? Whether a KIA is more fun to drive than an Audi etc.

Oh LoL. You realtors are so screwed. You all know the elite are going to crash the housing bubble? If you don’t even understand that then you are lost. Price will crash 60-75% in the GTA. LOL no you say? Ok you don’t understand the reality of automation and the ushering in of Basic income. Minimum wages is going to $15 and the reason for this is when corporations automate everything, and mass layoffs happen, the government will get blamed(was going to happen anyway) . In the future basic income will net you a rental , basic income plus side job will net you a $150K DT condo (currently sells for $600K) . Houses will be 3-3.5 times income , so $100K a year will net you $300k-350K annex house. Yes currently those houses have a 1 in front of the $350K but you can go ahead and knock that off since that is how much it will crash. Happy Housing Crash Everyone! :-) It’s coming :-)

Not that I am happy about it for the fact that it will affect us all “AGAIN” but there is a whole new market place that needs to experience what us over 50 have experienced many times. People truly do not learn from the past! Good-luck!!!

#18 Dan.t on 07.07.17 at 9:24 pm
It’s different in BC. Foreign money will keep prices up. Look at condo sales. Look all across BC, houses maybe not going up much in YVR but they are all over BC.

Explain that.

#18 Dan.t on 07.07.17 at 9:24 pm It’s different in BC. Foreign money will keep prices up. Look at condo sales. Look all across BC, houses maybe not going up much in YVR but they are all over BC. Explain that.
++++++++++++++++++++++++++++++++

Hans: “I mean, a large factor (according to most pundits) for the deficits was the fact that pensions couldn’t get decent returns from their fixed income portfolios…..so wouldn’t the opposite be true with interest rates rising”

You are right but for the wrong reason. When interest rates drop the liabilities of a Pension Plan grow exponentially. Eg: if you contribute $1000. and interest rates are at 10%, the plan can pay you $100/yr. If interest rates drop to 5% then you had better contribute another $1000. or you’re going to receive $50.

This is a simplistic calculation but it should give you an idea of the enormous problem that most defined benefit Pension plans have faced.

Rising rates will help plans significantly.

A lot of people that were banking on their homes as their retirement investment might get lucky with their Pensions.

People used to want to live life. Now everyone wants to curl up inside themselves, insulated from living by piles of money.

That is what’s behind the idea of your house going up in value each year. People have money. No need to go out and “work”. Just buy a house, get free cash and get away from it all.

Speaking from the experience of someone who has done that (gotten away from it all) I can tell you that the deserted beach in the tropics is friggin boring and you get tired of drinking and going for drunk swims all day. It drives you mad after a few months. Few survive it. Those who do are permanently scarred.

So the solution? Get off the debt train, that is what is killing you. Being part of a society that you understand is fun and interesting and part of being alive. You can’t do that holed up somewhere surrounded by cash, trying to not be involved.

The reason why most people desperately want out is because they are debt slaves. Having something to do each day, and coming home at night, with your hard earned cash (or not hard earned) to spend as you please, is living. It is how life is supposed to be. Not paying a huge mortgage and car loans and having to earn a certain amount each month so that your life doesn’t turn into what got put in the blender.

It is the axe over people’s heads that makes them want to get out. Remove the axe, life is fun.

Trust me I’ve been every single place that everyone else is trying on for size. Debt free, with a job is the best place there is.

Who cares that the rates will go up or not, the banks got the message and are moving their rates up. The TSX stock market will get crushed if the rates go up, financial suicide no matter how you put it. USD will gain back its rally vs. CAD in a month, their job market is way better
The stock market will shrug off many rate increases. — Garth

however this time around it will be far worse, firstly the level of debt is much higher and the prices are also significantly higher than in 1990
the other big and hidden elephant in the room is the amount of extended debt mortgage holders have IE Helocs and Loc’s that are effectively 2nd demand mortgages these where not very common in the 1990
correction. the third issue is the new found risk that the bank of mom has signed on for,by way of taking out significant loc’s to finance the kids real estate purchases this correction may and could take out a couple generations of home owners. the bank of moms retirement funds are defiantly at risk and the kid is likely toast.

Also, not mentioned in the main article: The US reported stellar job numbers and rising wages in June as well, setting the scene for another quater point hike in September. Then the BofC will have to match in October.

Thanks for your love and concern(maybe). I think we need to worry about the mental health of realtors. Yes they are shysters and deserve to suffer for a thousand years but even I feel bad for them. When it comes to work they are ruined for life now. They will not make for good workers anymore. If they lie (we all know they will) and say they were anything but a dirty lying realtor shyster, then maybe they will sucker someone into hiring them. Next time someone is asking for change on the street, please consider they may have been the top 10% realtor at one point in time. The worst part is there are some outstanding honest hard working realtors out there who are dominated by shysters. I think regulations in the industry would eliminate the bad apples but the bad apple are fighting tooth and nail to keep the crooked system crooked.

#27 Milton Has Warts on 07.07.17 at 9:41 pm
Ha ha ha ahhhh Milton, you poor pathetic place to call home. I will personally enjoy watching you and your smug attitude gown down in the tsunami that’s about to hit your shores. This is the new advertising for this area: Welcome to Milton, Ontario’s new fake stone and aluminum siding ghetto.

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Seriously.

I mean, I kinda “get” Richmond Hill, it has some pretty areas and is affluent. Markham and Brampton are okay for particular ethnic groups. Oakville – tony, old-money, some nice lakeshore areas. Whitby/Ajax, meh, not great but could be worse.

But Milton??? Who in god’s name moves there? You might as well move to Hamilton if you’re going that far out of Toronto. At least the Hammer has some attractive buildings, good restaurants, and just as quick to downtown TO.

Re: “It now appears there will be two rate increases in 2017 and (unless Trump nukes weird Kim) three more in 2018. ”

He won’t (nuke weird Kim). He’s a business man. Which means that politicians cannot understand him. But other business people can. He takes what is known in business as the “direct approach” whereas the politician will always take what is known as the “grandstanding approach”.

Ie: Politician: blow a lot of stuff up, put it on TV, give lots of money to your friends who are arms contractors (with connections who can get you re-elected). Give lots of speeches. Look impressive and powerful. Sure, you don’t have a clue what you’re doing, but that is not the point. You’re trying to get re-elected.

Businessperson: deal with the problem quickly and inexpensively. Watch the bottom line. Deal with it in a way that it doesn’t come back. Do it quietly, and tell no one. Look surprised when the problem is fixed.

Oh by the way the TSX is still at the same level as it was before the big recession 10 years ago. Yeah that leaves us with bank rates, what a pitty. We are trailing Dow Jones by 6000 points and the gap will get even wider. The bank rates will save us! Seriously. Our economy is trying to find traction and it is running out of options.

Waterloo is silicon nothing. After BlackBerry got absolutely embarrassingly TROUNCED by Apple all that is left are a bunch of startups (read welfare companies) that have had no revenue for years and they live off loaned money.

I look forward to hiring a former realtor to cut my grass around the house I will vulch in a few years’ time.

Let’s face it, these people have no skills. They completed a two-week course for idiots and then let the market do the work for them. Even if they made big money, they don’t have the financial acumen to actually keep it – it was all blown on expensive cars, trips, and probably illicit drugs.

I cannot confirm what people are selling for in Ajax/Pickering, but asking prices are still very high. One house was decently priced at 400k and pretty sure went for 500k. I will admit that maybe the asking prices might be starting to trend a bit lower. Do you have any anecdotes to support this? I have noticed anything outrageous is definitely sitting.

I’m not sure if I’m also drunk on scotch like Dr. Garth Turner, but why is the CAD at 77.7 cents when oil is at $44US per barrel?

I thought Poloz wanted a 50 cent Loonie so badly that he cuts the value of the Loonie by 10% for every $1 drop in oil prices!

I’m not complaining on a 78-cent loonie, but what happens when Toronto real estate collapses after hikes in interest rates? Is Poloz using a Mschievllian medthod to gain that dream of a 50-cent loonie?

Mark sounds like he is one of the most accurate Forex bloggers out there. It’s right that when the US dollar was in demand during the Great Depression, it’s index value skyrocketed because US dollars were scarce.

However, in a Canadian Great Depression, will Canadian Loonies be in demand as it is a commodity currency and a higher US dollar lowers commodity prices?

Shawn: I don’t think the BOC will be as aggressive as you’re suggesting.

I don’t think the Bank of Canada has a choice:

Essentially it’s been implied to me that the US is “blackmailing” Canada on the side – with trade wars / disputes – etc – unless they get with the rate hike program. There had apparently been some direct conversations in the past 4 weeks between high ranking Trump officials with their Canadian counterparts – basically saying – you better raise rates or life will be difficult.

Garth, I’m assuming when you make claims like “crashed 30%” or whatever you’re using seasonally adjusted data, no? Otherwise that would be dishonest, the kind of thing you teach us to expect from realtors. June after all is one of the lowest months of the year, it always drops in June.

So I read all the jealous comments of people that have no equity or no home ownership at stake. I failed to see anyone mention unemployment or foreclosures happening two big reasons 4 things to seriously drop. Summer is always a week time to sell a home everyone knows this. interest rates go up it affects no one other than the sellers as buyers are now more qualified and fewer. It’s only the people that got caught buying a home and are now trying to sell. all the homes for sale are just people hoping to cash in but it’s summer so big deal. New home builds are slowing down it’s not as though there is huge inventories of unsold homes. I’ve read these posts for a while now and I believe you are all wrong once again show me unemployment and foreclosures and then we can begin to talk about something. So interest rates go up so you don’t go on a vacation .Jimmy doesn’t play hockey this year big deal I don’t think two three two dollars a month will collapse families. If you’re not stuck in the middle no one is going to give away their home without Justified reasons like unemployment. I got it all out nice big rant enjoy

Says former broker and RateHub owner Rob McLister: “This one change would have more of an impact to mortgage shoppers than any Bank of Canada rate hike in history.”

Oh yes, another measure heralded as a potential marker killer just like the new qualifying at the 5 year fixed stress test introduced in October 2016. Right…..

The stress test measure was heralded as epic and a game changer. It was to be the ‘Millennial-killing Moister Stress Test.’ It was ‘supposed’ to knock out 15-20% of buyers as it amounted to having rates hiked at 2.5% – all those poor moisters would be unable to secure a loan at 4.5% instead of the usual 2% – because they were already seeking the max amount at 2% mortgage rates.

And how did that work out since they were introduced in October 2016? Right, markets in the GTA took off and Vancouver recovered and reached some new highs in the condo/townhouse segment.

And we are now supposed to think a 0.25% hike next week and some minor guidelines – that were supposed to be enforced but were not – are going to make a dent in the YVR market?

Come on, fool me once, shame on you, fool me twice, shame on me.

The very same measures that are ‘supposed’ to impact the market seem to do the opposite – at least that has been the case since cooling measures were introduced since 2008 (starting with the elimination of the 0% down 40 year mortgage).

Wow.
The way it started it will overshoot badly. Dollar will reach for parity again, and that won’t help either. oil has all the bad news there is baked in, and currently sitting on the powder keg, waving the welder. That would sit well with Alberta, not so well with tario and the turds.
Remember these times if you waited for them. Precious.

As many have pointed out, the BC market remains immune to the ‘crash.’

Instead, we see that: the condo and townhouse markets have reached new highs; foreign investment is back up after a temporary lull as buyers look at the 15% tax as the ‘cost of doing business’ with legal or illegal funds; and the price increase cancer has spread far and wide throughout BC.

From Chilliwack to Victoria to Comox to Kelowna to Nanaimo, prices have gone up 20-30% since the BC foreign buyers tax was implemented in the Greater Vancouver area. But hey, its not the foreign capital and those cashed out former Vancouverites driving prices up in the other regions or anything:) Nah, that would just be silly – the market distorting effect of people moving from a centre to surrounding areas is simply a GTA phenomenon…

Oh, and no great basket of Ontario ‘cooling measures’ (rent control, foreign and speculator taxes) for BC for at least many many months, if at all, even with the NDP government.

The GTA example will spook the new NDP government as they do not want to be blamed for falling prices, even though they campaigned on market cooling measures. And if the GTA market collapses, then you can expect rate hikes to be put on hold or even a reduction because the ‘centre of the universe’ drives the Canadian economy.

So effectively, you will see once again a tale to two cities – as Vancouver remains untouched from the GTA carnage, and in fact buoyed by that carnage that will ultimately mount pressure against any further rate increases…

It’s going to be a wild ride.
The only counterpoint to consider is that many millennials actually want part-time jobs. The full time gig can be limiting to side hustle that can be done online while eating avocado toast.

Boomers made out like bandits. Good for thenmbut they still love talking about how genius they were for buying a place to live 35 years ago and with the foresight that that YVR shack is now worth 2 mil, as they leave the city and pay cash for surrounding area houses.

Everyone else competes for one asset with free money and with foreign buyers….

All the while only topic guaranteed to be discussed at any gathering is real estate. No matter how you got it or how much you owe on it.. as long as you can tell people you have equity and look cool saying it.

Pretty stupid in some areas of . I guess there is nothing else to talk about in Canada… that’s what I notice. Been all over the world- topic hardly ever comes up. Only here.

@#77 Canuck, when is the last time prices dropped 13.6% in May and June? But sure, it’s summer, that’s all. And by the way, we are not jealous. We were jealous. But not anymore. Your precious “equity” is evaporating, evoking less jealousy by the week.

South Etobicoke…luxury condo high rise
One unit 2 bedroom…on market for 4 weeks at $650,000 not selling….usually sells in 10 days.
Now another similar unit for sale at $550,000.
A new phase in pricing?
NO….just trying to set up a bidding war.
Real Estate agents….up to there old tricks….over 10 showings in first day!
Maybe this trick will work.
After all….Garth….agents know buying is emotional and some people love to tangle…even if everything is non transparent.
Too bad suckers in Ontario can never see how much the other offers were….after the sale is final.
Will Real Estate transaction ever become a public disclosure requirement and divulge the offers for all bidders to see.
Wouldn’t that be Fair?

Real estate is a big problem but it is of the sort that gets covered up by bigger problems.

Like the fact that all government pension funds are going broke and the populous will not endure the simply punishing tax rates that would be required to maintain them. It simply will not happen, if you have a government pension get as much out now as you can or Venezuela. Or Illinois. Get out now you blood suckers!

Brussels is on fire over a G20 meeting. Trump is still tweeting away, if he actually does that. Canadian real estate seems important to us but once the nukes fly it won’t.

“However, in a Canadian Great Depression, will Canadian Loonies be in demand as it is a commodity currency and a higher US dollar lowers commodity prices?”

This is where Mark confuses Canada vs. the US. During international times of strife, everyone and their “flying dog” migrates to the US$. That will not be the case in a Canadian correction. We will be flying in the wind without international support and therefore need increases in rates to maintain our dollar.

Prices are back to January levels, which still is exorbitant. I don’t know what everyone is getting excited about. I see no real material drop in asking prices or sold prices in Markham. It’d need to come back to 2014 prices before it’s considered a correction. This didn’t even get did of last years gains yet. What benefit would someone have had buying now versus last year.

Several days later, Poloz (our Central Bank Govenor) spews comments about removing stimulus and raising interest rates, essentially a 180 degree u-turn reversal of his comments on policies only days prior.

Coincidence ?

I think not.

With NAFTA negotiations, lumber duties, trade issues, etc. all in a ‘fluid’ state, Morneau was politey told that things would go much better for Canada if the low dollarette gained some strength.

Poloz the putz and political lap dog did what he was told – remove the trade advantage of a lower dollarette and fast.

Painfully obvious to anyone conversant with CDA / USA trade dynamics and the US Presidents’s agenda.

Google, Facebook, Open Text and many other public companies have significant presences there.

The U of W has started or contributed significantly to over 70 public tech companies.

I travel all over the world and tech people all know Waterloo and its significance in the world of tech – certainly not Silicon Valley , but certainly not nowheresville either. It has the industry’s respect as a significant tech hub.

According to Deloitte in a report several years ago , 1 in 4 tech companies in Canada are founded in the Kitchener Waterloo area.

Bill Gates addresses the computer tech students there every few years and it is the only University outside of the USA where he has made such addresses multiple times.

What is the matter with you ?
I guess you are so tech savvy that you can’t even use Google to search out Waterloo.

This tells me all I need to know about the validity of your opinion.

Ah yes, you must be another Canadian not proud of our home grown achievements.

Now I’m kind wandering who drinks what in comment section… I generally don’t discriminate when it comes to alcohol, some time ago I diched red vino, but “firsts” choice now day would be beer 7% and up, and for some strange reason vodka lately. I guess dormant commy geens are waking up, so to counter them last night i switched to jägermeister best tea money can buy.
So dogs who drinks what?

There are so many facets that will be tied to this Housing Bubble Correction. Lots of topics to discuss in Blogs like this one. The effects will be far and wide and the true severity is yet to be determined. When watching any movement in markets, the rule is that three months of a pattern makes it legit. That is why Vancouver may be too early to call, it does look like they are experiencing a Dead Cat Bounce. Also there will be Government and Banking interventions as this rolls out that will sway the outcome. How the owner reacts and how much money they have as a buffer to hold out will also be a factor. Older Canadians bought vacation properties down South. They are also financing their adult Children’s lifestyle. When this correction becomes a reality a lot of calculated decisions will be made that will be much different than when people were comfortable with the growing equity from their houses. In recession people need to be mobile to get jobs. There will be many reluctant landlords that will not sell but rent their houses. It will not just be real estate agents and homeowners that will be effected, renters will also be greatly effected. In the US, rents initially went lower, if you could negotiate with a panicked owner, but then they began to rise as the people went from home owner to renter. There are a lot of emotions tied to this, believe me, no winners there. I lived in 7 States and rented 9 homes since 2008. We were not a victim of what happened, we were making calculated decisions to protect and grow. I watched and read and studied economic cycles for the duration. I also went through the BIG crash in TO 30 years ago. Lots of lessons to learn. Most of people have no idea of what is next or how to deal with it. Of coarse there will be resentment and blame and anger, this is all yet to come. This thing hasn’t even begun to happen yet, wait until REAL money is lost.

poor poor shyster realtors. no one cares about your fiction or thoughts. The only post that is read by EVERYONE is Garth’ s posts. btw foreclosures jumped 10X in the GTA. more to come. Happy Housing Crash Everyone!:-)

“#5 TWO FINGERS WATSON on 07.07.17 at 9:01 pm
If the carnage is as bad as u think it will be The Ploz will lower rates again in 2018 to save the entire country from collapse.”

The carnage will unfortunately be confined to those who purchased houses way beyond their means, and speculators.

The reality is no one cares about these people. They will get no sympathy from the government or anyone else.

Meanwhile the rest of the economy chuggs on gaining steam as it goes, people are working again, jobs are opening up, and those who unfortunately bought houses by borrowing tons of cash at low interest rates, at the peak of the market, will get crushed.

It will be cheaper houses for the working classes, less speculation, a more honest mortgage market and more jobs.

An economy with houses that no one can afford, is not a healthy economy. Things are coming back into balance.

#89 Arto on 07.08.17 at 12:24 am
The truth is Garth, even if this is popping of the RE bubble (which I hope it is), you can’t take credit for it because free market forces did not pop it. It was Government intervention
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What free market ? Engineered low interest rates and CMHC much ??
Free market would mean that most buyers wouldn’t qualify for half of what they can borrow .

I knew a fella that owned a farm on the edge of a growing town. They put a hydro line through his farm, expropriated the strip of land. He got a right-of-way to get to the other side. the developers were hungry for more lots, so he sold the other side to them. problem was the other farm was landlocked, and the developers had no legal access. The farmer went to all the planning meetings and told them they had no access. They ignored him. The day they went to close the first group of homes, it was ‘discovered’ that there was no access.
Farmer sold the right-of-way for a cool $1 million. He didn’t even own the land, just the ROW.
I love that story.

This is the chicken little the sky is falling stage the real estate market is just starting into now.
The greater fools of all time -2017-are still out there waiting to snatch up supposed deals from spooked sellers.
The market will progress through a period of denial (falling prices – no buyers) the this can’t happen to me syndrome of holding on and standing pat through a flatlne period through next year.
Then the bottom really begins to fall out in 2019 as stress levels reach their breaking point into the downward spiral to the bottom of the current real estate market in 2023.

“The truth is Garth, even if this is popping of the RE bubble (which I hope it is), you can’t take credit for it because free market forces did not pop it. It was Government intervention.”

Forgive me but, it was a long string of government interventions that blew this bubble to the absolutely ridiculous size it got to before bursting.

Unnecessary rate cuts, Cmhc insuring any and everything, 40 year mortgages, wtf the list goes on. Banks on the their own wouldn’t give you 100k to buy a tipping over semi in need of 100 – 200k in renovations to keep from collapsing on itself.

“In 1995, Donald Trump went to the American people and he said join me — I’m a winner — and invest in my company: Trump Hotels & Casino Resorts,” Buffett said. “They listed on the New York Stock Exchange and Mr. Trump very modestly made the ticker symbol DJT. Guess what that’s for.”

That business eventually turned out to be the worst part of Trump’s business portfolio.

“The next 10 years, the company loses money every year,” Buffett continued. “Every single year.”

Buffett added that while shareholders saw their investment crumble, Trump took home $44 million in compensation during that period.

For Trump, it wasn’t that he couldn’t deliver above-average returns. It was that he wasn’t even close to delivering an average return.

“In 1995 when he offered this company, if a monkey had thrown a dart at the stock page [of a newspaper], the monkey on average would’ve made a 150%,” Buffett quipped. “But the people who believed in him, who listened to his siren song, came away losing over 90 cents on the dollar. They got back less than a dime.”

“If the carnage is as bad as u think it will be The Ploz will lower rates again in 2018 to save the entire country from collapse.”

Doubtful……that would resume the brain-dead results of the BOC playbook of the past decade, plus.
Lowering rates would simply put this country squarely back on the path to financial ruin.
The ONLY way Canada will crawl its way out of this sideways, no-change mess is to force individuals to wake up, pucker up and STOP living off of credit.

In any event, those with actual cash will, as usual, ride out the mess created by CBs. Idiots who borrow as and for a lifestyle, will inevitably pay the piper.

So, both scenarios will cause pain, however, whereas the former will produce a healthier economy, the latter with stupid, low rates will do exactly the opposite.

“The mark of the beast spoken in the book of revelation …… Although this blog provides great tools to protect ones wealth, there is only one thing that will protect you from the coming calamity called the great tribulation. His name is Jesus Christ……”

My my ….a tad protective of a city named after the hamlet in Belgium where Napoleon lost his quest for world domination. (perhaps if he had just waited a few more hours directing the Battle rather than having leeches applied to his swollen hemmeroids)

Waterloo .A name that has become synonymous with “disasterous failures” .

Waterloo. A city that is slang for the stuff that swirls around after you flush a toilet in England…..

Looks like the Trudeau is working for the millennials. If you’re 25, things are really starting to look up for you.

– House prices should be affordable when you are looking to buy a home.
– Full employment, fairly easy to find a job, not a good one, but one all the same.
– Trudeau legalizing M and making alcohol more accessible.

Boomers went through seeing their savings evaporate in the 2008-2009 crash, and next may see their home equity evaporate with a house crash.

How low will it go?

Who knows? It all depends on when the millennials decide it is cheap enough, and they start buying up homes. Is that 10%, 20%, 50%? We will see.

Don’t think big changes move the market? A change in sentiment is more than enough to cause a drastic decrease in values.

Now allow me to retort on behalf of our beloved Realtors:
-Total consumer debt in Canada is 6.2% of total assets/wealth, so even if the housing market when down 90%, there would still be liquidity to cover
– too many immigrants / not enough land / houses
– Chinese are running out of land in their country and will buy up all of Canada, so buy now or be priced out forever
– .gov loves u, rates will never go up, .gov will never allow it
– Canadians have bigger ballz, would never rush for exits at the same time
– millennials have saved up for 10 years and will jump in at the slightest dip in prices
– everyone needs a house, and it’s different this time.

Location, location, location (or denial on my part). Province, city, neighbourhood and block. Just some observations and I am not sure any conclusions can be drawn but I have a few.

In my hood in sweltering and charming Calgary, there are 571 occupied residences and very few condos. There appear to be about 5 SFDs listed with 2 condos. Over the last couple of years, I have never seen more than 8. So .9% of the residences are listed. They sell quickly.

There are more fairly significant renos underway than listings based upon what I see on my wanderings.

The neighbourhood across the street has 3500 occupied residences including a high number of condos. There are 52 listings or 1.5% of the residences.

#22 The end is near on 07.07.17 at 9:30 pm
It is the plan of the global elites to send this world into a debt death spiral. These people are not looking out for our best interests. It is of my opinion that the next down turn will be global in effect and cascade any left over liquidity into a few hands. At this point in time we the people left with nothing will be begging for a new system and they will have one to offer. This entire plan is part of a much larger scheme coupled with the one world religion being brought forth by the Vatican. The mark of the beast spoken in the book of revelation where one cannot buy or sell without this mark. This is where we are headed, global enslavement. Although this blog provides great tools to protect ones wealth, there is only one thing that will protect you from the coming calamity called the great tribulation. His name is Jesus Christ and he died for all you because he loves you all greater than you can ever imagine. Turn to him before it’s too late, your eternal salvation depends on it. God bless.
Another scotch, please. — Garth
—————————————-
I think that everyone, Christian, Muslim, Jewish, antagonistic or atheist will say the same thing when they “die”. Everyone will say….
“Whoa !!, I didn’t see that coming”https://www.youtube.com/watch?v=iNgIl-qIklU&t=472s

#139 For those about to flop… on 07.08.17 at 11:48 am
Hey WULLY,I know why you have gone into hiding.

workworkworkwork…

Not hiding Mr. F. Been working hard from can see to can’t see setting up my practice. Pumped on the prospects. Ft. Mac is receding quickly in my mind but I am still fond of the place and in particular the fine folk that reside there.

I took a page out of catskinning IHDCT9’s book “Common Sense Methods of Annoying and Frustrating the Minister of National Revenue”. Bought a $20 desk.

Only those who aren’t talented enough to work anywhere but Waterloo stay in Waterloo. There is nothing special about the town. In fact it’s a fairly boring and poorly developed area with terrible weather. Nevermind the rest of the region; Kitchener, Cambridge and Guelph.

It’s attraction was inexpensive real estate, making it easy to settle around the area, much less so now. Average salary in the area is low, the vast majority engineers in the area make less than industry average.

Sure there maybe a few offices for fb, google, and the like. If you know anything about anything, you would know the American tech companies use those offices to recruit engineers straight out of university and then relocate the best to the Bay Area.

Companies in the KW area struggle to find any reasonable local talent at any salary as good talent leaves the area as soon as they can. That’s why there are hundreds of failing startups, small companies, and incubators in the area. The successful startups in that area tend to outsource all their development overseas.

These companies tend to live off of SRED grants, not revenues. Without SRED and the ability to outsource development for pennies on the dollar, the entire Canadian tech industry would fail overnight.

“found problems or abuses with contract for deed in 80 percent of the states.”
“There’s a whole underbelly of real estate that’s not through traditional sale,” said Robert Doggett, general counsel for Texas RioGrande Legal Aid and a critic of contracts for deeds.

” Unable to obtain a traditional mortgage, they have signed a high-interest, seller-financed deal known as a contract for deed that works like an installment plan for housing. For many, these deals can quickly turn into money traps.”

…”Contracts for deeds are difficult to track because the transactions are not recorded in many states. It can become difficult to determine who actually owns the property — and who is responsible for its upkeep and paying property taxes — often because the original contract is sold to several investors over time.”
ong-term, high-interest installment financing deal.

Actual ownership, or title to a home, passes to the buyer from the seller only after the last payment is made. The contracts, which can run for as long as 40 years, have become widespread in the Midwest and the South, where there are a large number of homes that sell for less than $100,000.

I recognize your rant as a person in the Denial stage of a correction. You also do not seem to understand that the masses have financed an over the top lifestyle for more than a decade and the fallout will be far greater than their kids not joining Hockey. Your belief that people are “jealous” of those that have borrowed more than they can afford is simplistic. People who are fiscally responsible, people that are savers, people who would not gamble and take on debts that defy logic and common sense, are not simply jealous. They are wanting fairness and common sense to return. They want to be able to invest with confidence. They are angry and frustrated that their kids can’t afford to buy a home. They are disappointed and in disbelief that the banks have loaned people these absurd amounts of money. They are worried because they know that it is a house of cards and the fallout will be negative for all of us. They are likely the people that actually have real money and know that they will be the ones holding the bag over all of this nonsense (bailouts) So as they watched everyone buying stuff they could not afford, going on Holiday’s and buying cars and $1000 Prom dresses. Living in houses that they should not have been in the first place. Their kids taking out crazy loans to go to college and living a club med lifestyle. Us common sense people overpaid on rent and were basically treated like smuck as a Dirty Renter. We had to explain to our kids that we were not buying a $1000 prom dress and hiring a Limo, well because that is just absurd. We taught our kids to be fiscally responsible in an upside down world that has been off the track for a while. The feeling that we have is not Jealousy it is much more complex than that.

I wonder if Canuck is one of the people essentially leading fake lives – everything purchased on debt to impress the neighbours. Big house, private schools for kids (why? Is our public system so terrible, aside from some teachers with neo-Marxist leanings?), beach vacations every year. It’s all a façade built on funny money. What will become of these people when the game of musical chairs ends? Savers and renters had better be prepared to fight against any and all proposed bailouts of homeowners and get firmly behind candidates who will back their cause.

Without lessening the achievements of the Waterloo tech hub and its feeder school, the very highly ranked U of Waterloo, at the end of the day most talented young Canadian techies will observe the glaring salary gap between Canada and the US and the choice will be a no-brainer.

From those of us (like me for example) who came up from “hood rat” status to multi millionaire, your comment rings very true and clear.

It’s almost like those with no desire to actually go through the brutal process of lifting oneself up from nothingness into financial success, saw an easy way out through cheap credit.

There is this reckoning process that takes place when a person has actually managed to change not just their place in the world, but the place of everyone connected with them. The person almost doesn’t believe that such a thing is possible.

But the principles stay the same. What you used to get where you’re at, coming from where you’re from, continue to work for you. Because that’s what got you here.

Question everything, argue with anyone who wants to take your money. Watch your bottom line. And don’t borrow. The same as a person did back when they were just another street kid heading for no good. Somehow, we got out. Got over the wall, and moved past all that hellish existence. Same principles still apply. And we know it…….

#89 Arto on 07.08.17 at 12:24 am
The truth is Garth, even if this is popping of the RE bubble (which I hope it is), you can’t take credit for it because free market forces did not pop it. It was Government intervention.

—————————

You can’t possibly be this daft. PLEASE tell me you are not this daft.

What do you consider ultra-low interest rates?

Government-backed mortgages (hint: GOVERNMENT-backed)?

Tax-free capital gains on primary residence?

Interest-free loans for first-time buyers (BC)?

Special tax credits for first-time buyers (Ontario)?

Wilful ignorance about foreign money-laundering and lack of any meaningful enforcement to combat it?

Be honest here. You’re all for government intervention when it helps homeowners/buyers and the indebted. You dislike it when it helps renters and savers.

Forgot, dawgs….I earned a true badge of honour yesterday: I got notice from my credit card company that they will be charging me $5 a month after 6 months of no activity. I told the card company to walk the plank. I’ll be dam#ed if I let some usurious card company drives my spending and/or spending habits.

Oh dear, my bad, I just wasn’t forcing debt through businesses that they could fleece for commissions.

Always vote with your wallet. Always.

Reminds me of a time less than a decade ago, when supermarkets were all trending sexed-up images with retooled interiors that came on like a bunch of designer boutiques – with the prices to match. That ain’t working so well now. I talk to employees all the time and they’ve told me it’s absolutely unbelievable the amount of food they throw out, because far fewer people are wasting money on processed fancy crap.

A couple of things. Garth-when you reply to post #51-The stock market will shrug off many increases, I’m not sure that is actually true. As rates go up the bond yields go up. The bond market is around 10 times the size of the stock market and can quietly flex it’s muscle. The bond market is actually a really big factor economically. Many individuals and funds like getting higher yields from bonds and will seek them out in preference to stock returns because of the secure investment aspect. The return is perceived as less risky.
Also I’m not convinced that we are in special times. You reply to post 132-In a normal market, yes. This is not normal.

Maybe it is. Maybe this is just normal market cycle stuff.
In my opinion, it seems that we are far closer to a top in both the stock market and the real estate market, but I doubt we are going to see a huge plunge in housing in Canada. Maybe the stock market (especially the U.S. which has run up a great deal since the 2008 crash). If higher interest rates and regulations put some pressure on housing prices, maybe it will provide somewhat of an opportunity to get into a property at a modestly lower price. That’s a good thing for many people who have been waiting to buy. Overall, I view real estate as a much better long term investment than stocks and I have trouble understanding the surge of affection for equities here. Stocks are meant to be bought on sale and best to be out of them long before they get toppy. Pick the best quality ones when they are on sale and sell after they have run up. People need places to live and houses can be rented out if needed.
We live in Victoria. The Victoria Real Estate Board puts out long term statistics. In 1978 the average house cost $63,733. In 1988-$127,888. In 1998-$246,018. In 2008-$583,701. Last year 2016 we were at an average price of $754,586. We seem to be roughly on trend for a price doubling about every 10 years in Victoria…for many years. To anyone who says this time is different- I encourage you to look towards Europe while you wait for this big correction.

When one sees $2 trillion in liabilities that include both mortgages and credit card debt, the BOC has got to get tough on this ‘free money’ debt-based economy before this foolishness completely ravishes this country. It’ll certainly be a tough go with Power Of Sale being on the rise, but the party hascto end before we’re all in 1929 era soup lines.

This is a correction in the making.
It has been for a long time . It was and remains irrational on many fronts. The new regulations and policies are a tad too late and are addition to the downward pressure which would have come apart eventually .
As a finance person and someone who works with mortgages and know many real estate professionals, I see it all and have seen a lot . Today new selling point by one realtor I know is ” Buy you house before rates increase”

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The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.